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Rural gas prices high: 'Live with it'

ST. PAUL - A new study shows what rural Minnesotans already knew: Gasoline takes a bigger bite out of their budgets than their city cousins.

Research by the Center for Rural Policy and Development shows that if gasoline costs $3 a gallon, 7 percent of an average rural resident's income would go for gasoline. At the same price, 3.9 percent of an urbanite's pay would go to fuel.

The biggest reason for the difference is in their income. The average rural resident earns $3,700 a month, compared to the urban salary of $5,557.

Rural residents also must drive longer distances and many, such as farmers, need low-gasoline-mileage vehicles for hauling.

Jerry Fruin, a professor and extension economist at the University of Minnesota's St. Paul campus could offer little hope for rural Minnesotans: "There doesn't seem to be a solution. ... Live with it or move."

Executive Director Brad Finstad of the rural policy center said the figures prove what rural Minnesotans have said for years, but now policymakers have "some facts in the debate."

Finstad, a former southern Minnesota legislator, said that state leaders can use the figures when they make new policies. An example he used is last year's gasoline tax increase, which affects rural residents more than those in cities.

State gasoline taxes rose 1.6 cents a gallon last week, one of several incremental increases contained in the state's 2008 transportation funding bill.

Fruin said that policymakers may not be able to lower rural gasoline prices, but "there are things they can do to not make it worse."

As gasoline prices and taxes rise, the percentage that rural residents pay also goes up. In general, the more rural the area, the higher percentage of a person's income goes to gasoline.

The center's study showed that if gasoline sold for $1.50 a gallon, a rural resident would pay 3.5 percent of his wages for gasoline (an urbanite would pay 1.9 percent), but at $3.82 a gallon like last summer, the rural resident would pay 9 percent (the urban person, 4.9 percent).

"This has been missing from the debate," Finstad said of the numbers.

"The higher price of gasoline hits poor people harder," said Fruin, an agriculture transportation expert.

While many people believe it costs less to live in rural areas, that is not the case for everything, Fruin said.

For instance, even if gasoline prices are not considered, it costs more to own a vehicle in rural Minnesota, where there are fewer car dealers and, usually, higher prices, the professor said. Other pricey goods, such as refrigerators, also may cost more where there is less competition.

Migration to cities has been on-going for more than 1,000 years, Fruin said, offering no sign that is about to change.

"Because of a variety of factors, there are often greater economic opportunities in the urban areas," he added.

Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.